San Jose Mercury News | By Dana Hull | April 18, 2003
Bechtel, the San Francisco construction firm that built the Bay Bridge and the Hoover Dam, won a lucrative, controversial contract Thursday from the U.S. government to help rebuild Iraq's war-ravaged power plants, water systems and ports.
The contract -- worth as much as $680 million over 18 months -- is the largest chunk of the $1.1 billion that the U.S. Agency for International Development is expected to hand out to American companies to rebuild Iraq following the U.S.-led bombing campaign.
The company, which helped repair Kuwait's oil fields after the first Gulf War, will initially receive $34.6 million and could earn the larger figure if Congress approves the funds. Bechtel and an array of subcontractors will repair power generation facilities, electrical grids, water and sewage systems, airport facilities and the Umm Qasr seaport. The contract may also involve repairing hospitals and schools.
''This was the big one that the construction industry has been waiting for,'' said Sherie Winston, a Washington correspondent for the trade journal ENR, or Engineering-News Record. ''It's a lot of work, money and jobs for the construction industry.''
But numerous critics, including some Democratic lawmakers, have screamed foul over the process by which the government chose the winning contractor.
Bechtel was one of only six major U.S. construction companies -- each politically connected and facing assorted controversies around the globe -- invited by the Bush administration to bid on the contracts. USAID said the six companies were chosen because they are the only ones that have employees with the needed security clearances and the proven ability to operate in war zones.
''Bechtel is honored to have been selected, through a competitive process, by USAID to help bring humanitarian assistance, economic recovery and infrastructure to help the Iraqi people,'' Tom Hash, president of Bechtel National, said in a statement.
A Bechtel spokesman said it was too early to discuss how many of the firm's Bay Area employees are likely to head to the Persian Gulf.
The privately held company has 47,000 employees working on 900 projects in nearly 60 countries. It had sales of $13.3 billion in 2002, according to Hoover's.
The losing bidders for the contract were Fluor, Parsons, Louis Berger Group, Halliburton and Washington Group International. Parsons confirmed Thursday that it was one of the finalists.
The bidding process came under fire not just from congressional Democrats but also from European countries, which complained that their engineering firms were shut out.
USAID's brief announcement made it clear that Iraqi engineering firms may be tapped to help Bechtel with the vast infrastructure projects.
''It is anticipated that Bechtel will work through subcontractors on a number of these tasks after identifying specific needs,'' said the agency. ''Through all of its activities, it will also engage the Iraqi population and work to build local capacity.''
U.S. taxpayers are expected to pay the initial contract costs, although the government says that Iraqi oil revenue will eventually pay for much of the reconstruction.
Bechtel's close ties with the Republican Party are well documented.
George Shultz, secretary of state under President Reagan and the first President Bush, sits on Bechtel's board of directors.
In February, Riley Bechtel, the chairman and chief executive of the family-controlled company, was named to the president's Export Council, a White House trade advisory group.
Jack Sheehan, a Bechtel senior vice president, has sat on the Pentagon's Defense Policy Board. And Bechtel contributed $1.3 million to political campaigns from 1999 through 2002, according to the Center for Responsive Politics.
Founded in Oakland in 1898 by Warren Bechtel, who left his family's Kansas farm to work on the railroad, Bechtel soon became the West's largest construction company.
In 1931, Bechtel helped found the consortium that built the Hoover Dam. And in 1976, it raised an entire industrial port city on the Persian Gulf -- one of 20 towns and cities the company has nearly built from scratch worldwide.
Last month, anti-war protesters staged massive protests in front of the company's Beale Street offices in San Francisco, accusing it of profiting from the war. Bechtel has long been a target of anti-globalization activists because of its controversial role in water privatization in Cochabamba, Bolivia.
''It's not surprising that Bechtel got the contract, given their ties to this administration and the Republican Party,'' said Antonia Juhasz, project director at the International Forum on Globalization in San Francisco, who traveled to Cochabamba. ''But it's disturbing, given the large public outcry over the process.''
Contact Dana Hull at dhull@mercurynews.comSan Jose Mercury News:
